T.B. Allen and Associates, Inc. v. Euro-Pro Operating LLC
Filing
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MEMORANDUM OPINION AND ORDER granting defendant's 2 Partial Motion to Dismiss Plaintiff's Breach of Contract and Equitable Claims (Written Opinion). Signed by Judge John R. Tunheim on June 28, 2012. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
T.B. ALLEN AND ASSOCIATES, INC.,
Plaintiff,
v.
Civil No. 11-3479 (JRT/JSM)
MEMORANDUM OPINION AND
ORDER GRANTING PARTIAL
MOTION TO DISMISS
EURO-PRO OPERATING LLC,
Defendant.
Ronald R. Kirchoff, KIRCHOFF LAW FIRM, 325 Cedar Street, Suite
300, St. Paul, MN 55101, for plaintiff.
Christine Kim, Kevin M. Decker, and Paul J. Hemming, BRIGGS &
MORGAN, PA, 80 South Eighth Street, Suite 2200, Minneapolis, MN
55402, for defendant.
Plaintiff T.B. Allen and Associates, Inc. (“T.B. Allen”) brought this action against
Defendant Euro-Pro Operating LLC (“Euro-Pro”), alleging that Euro-Pro did not pay it
commissions that it earned. T.B. Allen’s claims include breach of contract and the
implied covenant of good faith and fair dealing, promissory estoppel, unjust enrichment,
and violations of Minnesota Statute § 181.145. Euro-Pro moves to dismiss all of T.B.
Allen’s claims, except its § 181.145 claim. Because T.B. Allen has failed to plead these
claims with specificity, the Court will dismiss them without prejudice.
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BACKGROUND
T.B. Allen asserts that it had an “oral sales representative agreement . . . of
indefinite duration with [Euro-Pro] to act as [Euro-Pro’s] exclusive sales representative
for Target Corporation, Kohl’s, Best Buy and certain other accounts.” (Compl. ¶ 5.)1
The alleged agreement was effective from at least November 1, 2005 through October 31,
2011. (Id. ¶ 6.) During this time, T.B. Allen “solicited wholesale orders on behalf of
[Euro-Pro] and was to be compensated on commission on the sales of [Euro-Pro’s]
products to [T.B. Allen’s] accounts by [Euro-Pro].” (Id. ¶ 6.) T.B. Allen contends that
Euro-Pro has failed to pay all of the agreed-upon commissions but does not specify the
amount of compensation due under the terms of the agreement.
According to T.B. Allen, Euro-Pro notified it around November 2008 that it would
withhold any and all commissions earned by T.B. Allen in excess of $800,000 during
T.B. Allen’s fiscal year 2009. (Id. ¶ 7.) Euro-Pro also notified T.B. Allen of its decision
to “reduce certain of [T.B. Allen’s] commission percentages in effect at that time but
thereafter to be based on gross sales.”
(Id. ¶ 7.)
T.B. Allen alleges that these
“deductions” or “hold backs” by Euro-Pro were “wrongful.” (Def.’s Mem. in Opp’n of
Mot. to Dismiss, at 4, Dec. 20, 2011, Docket No. 7.) T.B. Allen attached a chart to its
complaint, detailing “such actions taken by” Euro-Pro. (Compl. ¶ 7.) This chart, not all
of which is legible, is dated November 1, 2008 and appears to show T.B. Allen’s
commission percentages and commissions associated with sales to various companies.
(Compl., Ex. A.) The chart shows some variation among the commission percentages for
1
It is unclear what Euro-Pro products T.B. Allen allegedly contracted to sell.
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fiscal years 2008 and 2009 and displays reductions in the commission percentages for the
fiscal year 2010.
A notation at the bottom of the chart states that T.B. Allen’s
commissions were capped at $800,000 for fiscal year 2009. (Id.)
ANALYSIS
I.
STANDARD OF REVIEW
Reviewing a complaint under a Rule 12(b)(6) motion to dismiss, the Court
considers all facts alleged in the complaint as true and construes the pleadings in a light
most favorable to the non-moving party. See, e.g., Turner v. Holbrook, 278 F.3d 754,
757 (8th Cir. 2002). To survive a motion to dismiss, however, a complaint must provide
more than “‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause
of action . . . .’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)). That is, to avoid dismissal, a complaint must
include “sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Id. (internal quotation marks omitted). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Where
a complaint pleads facts that are merely consistent with a defendant’s liability, it stops
short of the line between possibility and plausibility,” and therefore must be dismissed.
Id. (internal quotation marks omitted). At the motion to dismiss stage, the record for
review before the Court is generally limited to the pleadings, some matters that are part of
the public record, and any documents attached as exhibits that are necessarily embraced
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by the complaint. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.
1999).
II.
BREACH OF CONTRACT
T.B. Allen first asserts that Euro-Pro has committed a breach of contract by failing
to pay commissions due and owing to T.B. Allen. To establish a breach of contract claim
under Minnesota law, the plaintiff must prove that (1) an agreement was formed, (2) the
plaintiff performed any conditions precedent, and (3) the defendant breached the
agreement. Nicollet Cattle Co. v. United Food Group, LLC, No. 08–5899, 2010 WL
3546784, at * 7 (D. Minn. Sept. 7, 2010) (citing Commercial Assocs., Inc. v. Work
Connection, Inc., 712 N.W.2d 772, 782 (Minn. Ct. App. 2006)).
There are two problems with T.B. Allen’s breach of contract claim. First, the
claim is based on Euro-Pro’s failure to pay commissions, but T.B. Allen has not pled the
terms of a contract entitling it to higher commissions.2 See Debnam v. FedEx Home
Delivery, No. 10-11025, 2011 WL 1188437, at *1 (D. Mass. March 31, 2011) (dismissing
breach of contract claim where plaintiff did not sufficiently specify contractual
obligations). Second, T.B. Allen has not pled facts to demonstrate why, pursuant to its
“indefinite” contract with EuroPro, the amount of commission was not subject to change.
See Minn. Deli Provisions, Inc. v. Boar’s Head Provisions Co., Inc., 606 F.3d 544, 549
(8th Cir. 2010) (“[In Minnesota,] [t]he general rule is that a contract having no definite
2
The chart attached to T.B. Allen’s complaint does not provide this information because
it does not elucidate the terms of the alleged contract and because the complaint refers to the
chart vaguely as “detailing such actions taken by Defendant.” (See Compl. ¶ 7 & Ex. A.)
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duration, expressed or which may be implied, is terminable at will upon reasonable notice
to the other.”) (quoting Benson Co-op Creamery Ass’n v. First Dist. Ass’n, 151 N.W.2d
422, 426 (Minn. 1967)). Without more information, there is insufficient factual content
to draw a reasonable inference that Euro-Pro is liable for failing to pay T.B. Allen
commissions.3 See Iqbal, 129 S. Ct. at 1949. Accordingly, the Court will dismiss the
breach of contract claim and find that T.B. Allen has failed to state a breach of contract
claim that is plausible on its face.
III.
PROMISSORY ESTOPPEL
T.B. Allen next asserts that Euro-Pro is liable under a theory of promissory
estoppel. Promissory estoppel requires three elements: (1) a clear and definite promise;
(2) the promisor intended to induce reliance, and such reliance occurred; and (3) the
promise must be enforced to prevent injustice. Olson v. Synergistic Techs. Bus. Sys., Inc.,
628 N.W.2d 142, 152 (Minn. 2001). Although a promise must be clear and definite, a
party need not always specify each precise term of a promise in order to state a claim.
Newberg v. Schweiss, No. 08-4681, 2009 WL 3202380, at *3 (D. Minn. Sept. 30, 2009).
Normally, promissory estoppel and breach of contract claims can only be asserted in the
alternative. See Fed. R. Civ. P. 8(a)(3); Deli v. Univ. of Minn., 578 N.W.2d 779, 781
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T.B. Allen also asserts that Euro-Pro breached the implied covenant of good faith and
fair dealing through breaching the contract. Because T.B. Allen has not stated a breach of
contract claim, the Court finds that it has also failed to state a violation of the implied covenant
of good faith and fair dealing. In addition, T.B. Allen has not pled facts demonstrating that the
covenant applied to its relationship with Euro-Pro. See Bratton v. Menard, Inc., 438 N.W.2d
116, 118-19 (Minn. Ct. App. 1989) (holding that, absent a contrary agreement, there is no
implied covenant of good faith and fair dealing in employment contracts).
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(Minn. Ct. App. 1981) (“Promissory estoppel implies a contract in law where no contract
exists in fact.”); Banbury v. Omnitrition Int’l Inc., 533 N.W.2d 876, 881 (Minn. Ct. App.
1995) (“[T]he doctrine of promissory estoppel only applies where no contract exists.”).
Promissory estoppel can also, at times, apply to promises associated with at-will
employment contracts, where neither party was committed to performance due to the
contract’s bilateral power of termination. Krutchen v. Zayo Bandwidth Ne., LLC, 591
F. Supp. 2d 1002, 1017-18 (D. Minn. 2008).
The Court finds that T.B. Allen has failed to assert a claim of promissory estoppel
for two reasons. First, T.B. Allen has failed to identify a “clear and definite promise”
entitling it to commissions. See Olson, 628 N.W.2d at 152. Accordingly, there are
insufficient facts to support Euro-Pro’s failure to pay promised commissions. Second, as
pled, T.B. Allen’s promissory estoppel claim relies on its breach of contract claim. See
Krutchen, 591 F.Supp.2d at 1018 (dismissing a promissory estoppel claim because it was
duplicative of a breach of contract claim). Specifically, T.B. Allen pled that Euro-Pro
“promised [T.B. Allen] that it would honor the terms of their Agreement.” (Compl.
¶ 14.). Because T.B. Allen’s theory of promissory estoppel is insufficiently specific and
is duplicative of its breach of contract claim, the Court will dismiss the promissory
estoppel claim.
IV.
UNJUST ENRICHMENT
T.B. Allen next asserts a claim against Euro-Pro for unjust enrichment.
To
establish this claim under Minnesota law, a plaintiff must demonstrate “that another party
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knowingly received something of value to which he was not entitled, and that the
circumstances are such that it would be unjust for that person to retain the benefit.”
Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. Ct. App. 2001). “[T]o ensure
that unjust enrichment is not used to reward a bad bargain, Minnesota courts require
proof that ‘a benefit was conferred unknowingly or unwillingly.’” Holmes v. Torguson,
41 F.3d 1251, 1256 (8th Cir. 1994) (quoting Galante v. Oz, Inc., 379 N.W.2d 723, 726
(Minn. Ct. App. 1986)). Further, the benefit must be obtained unjustly – illegally or
unlawfully – or in situations in which it would be “morally wrong” for one party to be
enriched at the expense of another. Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of
Can., Ltd., 552 N.W.2d 254, 268 (Minn. Ct. App. 1996).
The Court will dismiss T.B. Allen’s unjust enrichment claim for the same reasons
as the promissory estoppel claim. First, T.B. Allen has pled insufficient facts to prove
that Euro-Pro was unjustly enriched by failing to compensate T.B. Allen. Second, T.B.
Allen has not pled unjust enrichment in the alternative, but has based its claim on
violations of a contract. (See Compl. ¶ 21); Taylor Inv. Corp. v. Weil, 169 F. Supp. 2d
1046, 1060 (D. Minn. 2001) (“The existence of an express contract between parties
precludes recovery under theories of quasi-contract, unjust enrichment, or quantum
meruit.”).
Although T.B. Allen has failed to state facts sufficient to prove breach of contract,
promissory estoppel, or unjust enrichment, it is possible that these claims may survive if
properly alleged. Accordingly, the Court will grant T.B. Allen thirty days to amend the
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Complaint to address the deficiencies in pleading.
T.B. Allen must not amend the
Complaint, however, unless it has facts to support its claims.
ORDER
Based on the foregoing, and the records, files, and proceedings herein, IT IS
HEREBY ORDERED that Defendant’s partial motion to dismiss Plaintiff’s breach of
contract and equitable claims [Docket No. 2] is GRANTED.
It is FURTHER ORDERED that Plaintiff shall have thirty (30) days from the
date of this Order to file an amended complaint.
DATED: June 28, 2012
at Minneapolis, Minnesota.
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JOHN R. TUNHEIM
United States District Judge
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